Legal Concerns of Foreign Companies in China

20 February 2011
I have been frequently asked about the major legal concerns that foreign companies in or entering in the Chinese market must deal with. In surveys, foreign businesses operating in China often identify legal issues as among their biggest challenges; while many are idiosyncratic, what concerns are most frequently encountered? Commercial Transactions - the Need for […]
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SPC on Foreign-Invested Company Disputes

20 February 2011
In response to the rapid increase in the number of disputes involving equity transfers, equity pledges, and other similar transactions for foreign-invested enterprises, the Supreme People’s court recently released the Interpretations of the Supreme People’s court on Several Issues Concerning the Trial of Disputes Involving Foreign-Invested Enterprises (“Interpretations”) – effective as of 16 August 2010. […]
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Cost of Litigation

20 February 2011
Common risks to Chinese litigation (and to a certain extent, arbitration) are local protectionism, evidentiary rules, and enforcement challenges, but just as important in many smaller disputes is the cost of litigation. Companies should carefully consider whether the legal costs are worth the potential benefits, especially since not all these costs are recoverable. 1. Pre-litigation […]
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Effective Corporate Governance in China

20 February 2011
Foreign investors generally presume that management problems are inherent to Chinese-foreign joint ventures, but not to companies of which they are the sole shareholder. Unfortunately, this perspective does not take into account the rights and responsibilities of directors and senior managers. Clients frequently ask us about the rights and responsibilities of directors and senior managers […]
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Trends in Company Investigations

20 February 2011
Common is the story of the foreigner who thought he was buying from a Chinese company, only to find out later that the company never existed – making any claim for repayment futile. This extreme example serves to illustrate the need to know one’s Chinese business partner beyond the rituals of exchanging name cards and […]
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New Restrictions to Enjoy Tax Treaty Benefits

20 February 2011
Under Chinese law, a foreign company or individual doing business in China as a non-resident is subject to taxation in China on the income derived from China. Non-residents may, however, be entitled to preferential tax treatment if its home jurisdiction (referred to as the contracting state) has entered into a double taxation treaty with China. […]
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Rep Offices in China Face New Burdens

20 February 2011
One of the first vehicles available to expand into China, the representative office (RO) has over the years been used by countless foreign companies to establish a first foothold in the country. The RO offers these companies a presence without demanding a big financial commitment. However, with the introduction of new rules, the rep office […]
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Company Stamps: The Ultimate Business Tool

20 February 2011
An important difference in business practices between China and many western countries is the value that courts and officials give to the stamp (in China often referred to as the “chop” or seal). We introduce the rules and practice, and some suggestions on how to manage your risk. For many western companies, the signature of […]
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Where to Start Your IP Strategy?

20 February 2011
The continued pervasiveness of counterfeiting in China is not only a problem of law, but also one of enforcement. While China’s laws and regulations conform to the agreement on trade-related aspects of intellectual property rights (TRIPS) and other widely accepted international principles, certain parts of China’s protection mechanism have proven ineffective. Common examples are the […]
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